Estimate cost to company of employee stock option issue

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Reference no: EM131237484

A company's stock price is $50 and 10 million shares are outstanding. The company is considering giving its employees 3 million at-the-money 5-year call options. Option exercises will be handled by issuing more shares.

The stock price volatility is 25%, the 5-year risk-free rate is 5%, and the company does not pay dividends. Estimate the cost to the company of the employee stock option issue.

Reference no: EM131237484

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